Collaboration key in battle against rise in retail shrinkage

Published on: 27th July 2012

A new report has found that only 55% of retailers are collaborating with each other in their battle against theft and fraud despite seeing collective shrinkage reach 1% of sales. 

The Retail Fraud Study, conducted by Martec International, found that whilst many loss prevention and e-commerce risk professionals wanted to collaborate more with each other to reduce shrinkage, they were prevented from doing so by more senior business personnel for fear of losing a competitive edge.

Frances Riseley, deputy managing director at Martec International, commented: “It is quite surprising that despite a 10% increase in shrinkage, costing £3.4 billion, 22% of retailers felt that collaboration would not assist them in reducing losses. Of those that wanted to work together the biggest issue was that senior retail figures prevented collaboration as they were afraid of losing a competitive edge by sharing information with competitors. This is an unnecessary worry as the shared data would be things like theft patterns which will have no impact on the competitiveness of retailers, but failure to assist each other in tackling shrinkage is actually eating into their profit margins and the health of the sector.”

Retailers were asked what areas they felt they could benefit from greater collaboration and an overwhelming 23% reported that they could use greater assistance from police in tackling in-store crime. Those retailers identified criminal activity as the biggest threat to the retail sector and felt it could be better tackled with more input from police forces across the country.

Fran Riseley added: “Those retailers who are already collaborating felt quite strongly that they would continue to hit a brick wall in their battle against shrinkage unless they received improved support from police forces and this is something they are already working on attaining. With such a large percentage of retailers’ losses due to theft – retailers can only achieve so much in terms of loss prevention without the police playing its part.”

Other areas identified for better collaboration were banks (19%), suppliers (14%) and use of a common technology platform (12%). Of those retailers already collaborating the most common method was a common fraud management system.

Mike Gleeson, development and operations manager business protection for John Lewis, commented: “We participated in the Retail Fraud study and found the insight the report provides valuable, demonstrating that the retail sector would benefit from a collaborative approach in tackling the issues it faces.”

The Retail Fraud Study took 600 hours to complete with Martec conducting in-depth interviews with key loss prevention and e-commerce personnel from 100 of the UK’s top retailers, including Tesco, John Lewis, Marks & Spencer, HMV and Mothercare, accounting for 42% of the UK retail market with a combined £141 billion in sales. It was supported by Volumatic, the UK’s leading manufacturer of intelligent cash handling equipment and RGIS the global leader in stocktaking, supply chain and merchandising solutions.


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